Property Rights: The Pollution Solution

Cap and trade? Cap and tax? Is your knowledge of this latest energy policy scheme limited to little more than witty slogans or partisan sound bites? The reality is that the cap and trade legislation is nothing more than yet another government-granted license for private organizations to violate the rights of others. Before getting into the libertarian solution to pollution, let’s take a look at how cap and trade actually works.

While the bill that recently passed the House of Representatives weighs in at over 1200 pages (plus amendments), the simplified explanation consists of two parts: “cap” and “trade”. The cap is the part the liberals love. Government experts would determine the amount of greenhouse gasses our environment is capable of handling, and would then cap emissions at that level. But how would the government enforce this cap? By requiring companies to pay for the privilege of polluting, of course. “Emissions credits” would be auctioned off (or freely given to politically-favored corporations) to grant pollution rights to the highest bidder. Already, the plan is beginning to show its true colors.

The second part of this plan is “trade”. Once the companies have received their pollution permits, any company that falls short of its limit can sell its credits to another company. This gives the impression of free-markets to draw in conservatives, but the reality is that the money paid by companies to obtain these credits in the first place functions as a tax that gets passed on to consumers in the form of higher energy prices.

If the liberal plan reeks of pay-to-play corruption, and the conservative plan stinks of corporatism, what is the libertarian solution? The answer lies in individual rights. To illustrate this point, imagine that the government tells your neighbor that they can dump four bags of garbage into your yard, but not five, because five would be too much. To make matters worse, imagine that if this neighbor can’t find four whole bags of garbage, your other neighbor would get to dump the remaining amount of his own garbage into your yard as well. This is cap and trade in a nutshell. It should be perfectly clear here that the real issue is not pollution per se, but property rights. If property rights were properly enforced, and those harmed by pollution were free to sue companies that had harmed them, very few companies would find it in their interest to continue polluting. Likewise, while there would be no legal restriction keeping these companies from polluting their own property, it is no great intellectual feat to realize that it is not in their best interest to destroy their own property by continuing to do so.

Libertarians believe that government should never grant to private organizations (or to themselves) the right to commit what would otherwise be criminal or fraudulent acts. The way to improve the world is not through utilitarian arguments that “what’s good for business is good for America” or through centralized policy directives emanating from Washington, DC, but rather through respect for the individual, the smallest minority on earth.